Four railway services and contracting companies are learning the hard way that failing to provide proper notice before conducting criminal background checks on employees can land you in court. In In re H&M Int’l Transp., a suit filed with the Federal Trade Commission July 11, 2007, the employees claim that the companies violated the Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.) by failing to give them notice before performing background checks and before dismissing workers with a criminal history.

The Fair Credit Reporting Act requires companies to provide workers with notice before performing criminal background checks. The Act also requires companies to provide workers with notice before firing or reassigning workers whose background checks reveal a criminal record. Such notice allows workers the opportunity to dispute inaccurate records. These inaccuracies may simply be the result of identity theft or typographical errors.

While criminal background checks may serve an important function for a company, before conducting background checks or taking action based upon the results of those checks, companies must comply with the notice requirements of the Fair Credit Reporting Act. By doing so, companies can protect themselves from lawsuits such as this one. If you have questions regarding how to comply with the Fair Credit Reporting Act when conducting criminal background checks, please contact an employment lawyer at Holme Roberts & Owen LLP.